What is the alternate valuation method?

Alternate valuation method refers to the valuation of the gross estate of a decedent for estate tax purposes as of a date other than that of his death, usually one year after the date of his death.

What is alternate valuation?

The executor will have the option of valuing the estate on the date of death, or alternately, on the six-month anniversary of death – the latter is, fittingly, referred to as the “Alternate Valuation Date.”

What is the purpose of the alternate valuation date?

An alternate valuation date must do two things. It must decrease the value of the federal taxable estate, and it must decrease the amount of federal estate tax due.

How do you elect to use the alternate valuation date?

Alternate valuation can be elected on a timely filed return or on an original return that is not delinquent by more than one year. If the election is not made on the original return, it can only be made on a subsequent return if it is filed by the due date of the original return (including extensions).

What valuation should be used in determining the gross estate?

The gross estate consists of the value of all property (real or personal, tangible or intangible) owned by a decedent or in which the decedent had an interest at the time of death. See I.R.C. § 2031(a). Generally, assets are included in the gross estate at their fair market value on the date of the decedent’s death.

What is alternate valuation on Form 706?

Alternate valuation, which you elect on line 1, Part 3 of Form 706, allows you to value the property of the estate as of six months after the date of death rather than on the date of death.

What assets Cannot use alternate valuation date?

The value on an alternate date must include the entire estate and cannot be applied to selected assets owned by an estate. An exception to this rule applies to any assets sold between the date of death and the alternate valuation date. Such assets are valued as of the date of disposal.

How do you calculate the value of an estate?

When calculating the value of an estate, the gross value is the sum of all asset values, and the net value is the gross value minus any debts: in other words, the actual worth of the estate.

What valuation should be used in determining the gross estate What is the basis for the fair market value of a real property?

3. What will be used as basis in the valuation of property? The properties comprising the gross estate shall be valued based on their fair market value as of the time of decedent’s death. The fair market value as shown in the schedule of values fixed by the provincial and city assessors.

How do you determine fair market value of property?

To determine FMV, you can also consider real estate indices, such as the National Housing Bank’s (NHB’s) Residex, and two indices of the Reserve Bank of India (RBI)—Housing Price Index (HPI) and Residential Property Price Index (RPPI). But again, the utility of these indices is limited.

What is a good market value?

Traditionally, any value under 1.0 is considered a good P/B value, indicating a potentially undervalued stock. However, value investors often consider stocks with a P/B value under 3.0.

What is the other term for fair market value?

Fair market value can also be referred to as fair cash value or fair value.